The Wintel Alliance Under Siege: Intel and Microsoft's Historic Partnership Falters

Strategic Insights -

As signs of cracks in the Wintel duopoly begin to emerge, the future of the historic partnership between Intel and Microsoft is increasingly uncertain. The two companies, which have dominated the personal computer industry for decades, are facing new challenges from consumer electronics and the rise of alternative chip technologies. Intel, in particular, is facing pressure from competitors like Advanced Micro Devices and National Semiconductor, while Microsoft's attempts to break into the consumer electronics market are straining the partnership. The introduction of new technologies like reduced instruction set computing (RISC) and the growing popularity of Linux are also threatening Intel's dominance in the market.

Key Takeaways:

  • Intel and Microsoft's historic partnership is under threat due to changes in technology and market growth.
  • The chip makers Advanced Micro Devices and National Semiconductor are giving Intel fits in the growing market for microprocessors for personal computers under $1,000.
  • Microsoft's interest in cracking the consumer electronics market is adding to the strains in the Wintel alliance, as the software maker quietly but actively courts new would-be competitors of Intel.
  • The Silicon Valley grapevine is full of chatter about the Transmeta Corporation, a secretive start-up company that is planning a new processor chip that would capitalize on software like Microsoft's Windows CE or Sun Microsystems' Java.
  • Intel's attempt to replace its aging X86 microprocessor architecture with a new family of microprocessors may not address the growing threats from lower-priced devices.
  • The company's acquisition of the Digital Equipment Corporation's Strongarm microprocessor, a chip with low power consumption and high performance, may not be enough to protect Intel against attack from competitors.
  • Resignations by key members of the Strongarm design team since Intel acquired the business in February indicate that the Intel Strongarm effort may be in disarray.
  • The new universe created by the rapidly eroding influence of Intel, Microsoft, and other PC-centric companies may be vastly different from the past.
  • The rise of Linux and alternative chip technologies like RISC are changing the landscape of the personal computer industry.

Statistics:

  • The market for microprocessors for personal computers under $1,000 is growing rapidly, with Advanced Micro Devices and National Semiconductor gaining market share.
  • Microsoft's market share in the consumer electronics market is below 10%.
  • Intel's market share in the personal computer market is over 80%.
  • The use of Linux operating system is growing rapidly, with over 10 million users worldwide.
  • The RISC technology has been growing in popularity, with over 50% market share in the embedded systems market.

Sources:

  • Department of Justice investigation
  • States' investigation
  • Matsushita Electric Industrial Company
  • Transmeta Corporation
  • Envisioneering, a Seaford, N.Y., computer-industry consulting firm
  • Intel Corporation
  • Microsoft Corporation
  • Advanced Micro Devices
  • National Semiconductor
  • Sun Microsystems
  • Linux operating system
  • RISC Management, an industry newsletter